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tv   Nightly Business Report  PBS  September 9, 2011 1:00am-1:30am PDT

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>> tom: president obama goes to capitol hill and lays out his plans for creating jobs. what will congress do? >> will they act and will they act now to create jobs and cause economic growth at a time of great difficulty for many of our fellow citizens? >> susie: federal reserve chairman ben bernanke acknowledged today the weakness in the economy and said the fed is ready to do what's needed to promote a stronger recovery.
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it's "nightly business report" for thursday, september 8. this is "nightly business report" with susie gharib and tom hudson. "nightly business report" is made possible by: this program is made possible by contributions to your pbs station from viewers like you. captioning sponsored by wpbt >> susie: good evening everyone. the world is waiting to hear president obama's highly- anticipated speech on job creation. the president will address congress at 7:00 p.m. eastern
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time. tom, his plan is expected to come with a price tag of at least $400 billion. >> tom: susie, the president is going to offer ways to pay for it that the white house says won't involve dragging the u.s. into more debt. of the president pledges this plan won't add to the spending deficit. >> and there will be a message to republican lawmakers fixing the struggling economy is their job, too. besides congress and the president, there are many other players who over the next few weeks will weigh in on the best way to fix the economy. darren gersh has details. >> reporter: first there's the super committee. the lawmakers charged with coming up with $1.2 trillion in budget cuts in the next 10 weeks met publicly for the first time today, and many began by talking up the need for bipartisan action. >> it is time for both sides to bite the bullet, to put the country first, get the economy moving and implement a long-term
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deficit reduction plan. >> reporter: most washington analysts have low expectations the committee will actually do that, but some members are talking up an ambitious agenda. >> comprehensive tax reform would spur economic growth and job creation and should be part of our discussion. >> reporter: next, there's monetary policy. in a speech in minneapolis today, federal reserve chairman ben bernanke said he was surprised by just how cautious american consumers have been, but he gave no hints about where the fed is headed next. an important new clue may come when the fed updates its forecast later this month. >> they've said that inflation is about at their goal. if inflation is at their goal, it's hard to justify accommodative policy more than they've already provided. >> reporter: and of course tonight...the president lays out his vision for how to get the economy moving. tom? >> tom: attorney you know this, that president obama has been criticized widely in the past for not writing a specific
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piece of legislation, instead just talking about general goals for legislation. is there a bill the white house is going to send up to the hill? >> well, there's certainly a name for it. the president's going to call it the american jobs act. whether we're going to get detailed legislative language, it's not clear, but in any case, republicans are going to be the ones who have a big say in writing this bill, especially in the house. it's interesting that the president did save some surprises. as you mentioned, there's going to be a larger payroll tax cut. that's going to add an extra $60 billion to the economy if it gets through. it will put an extra $500 into consumers' pockets so that's important. we also are going to have that hiring credit for employers who hire new workers. so he's got a lot to talk about with the republicans. >> tom: and you laid out in your piece all of the different voices that are going to weigh in, the super committee meets again next week, the federal reserve in two weeks. when could congress take up any
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specific jobs legislation? >> congress could do this very quickly. you'll remember the last time they passed the payroll tax cut, they did it after the election, and they did it in just a couple of months. so they can move quickly when they want. but if the president has got a lot of things in here, tax cuts to pay for these stimulus plans, or things that republicans object to, it's going to slow it down quite a bit, and we could be in for more policy drift. >> tom: since the debt deal was signed into law in early august, stocks are down 9%. august came and went, no net new jobs. how does all this play into the climate the president is going to walk into tonight on capitol hill? >> as one republican economist told me, it's very clear that members of congress are going to come back chasent from their summer. obviously, they heard voters are unhappy. their approval ratings can't get much lower, so the members of congress know that voters are upset. but the question is, if you are a member of congress who thinks
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voters upset because you're not doing enough about the economy and you believe that the solution is to cut spending and to reduce regulation, you're going to double up on that. if you're a member of congress who thinks that the problem is that you didn't spend enough, you're a democrat who believes you have to be more aggressive on federal programs, well, you're going to push harder for that. you could be very chastened but the environment could mean that you're more at loggerheads. >> tom: it's certainly an interesting environment for investors as well. it's darren gerv. >> susie: so what do c.e.o.s want to hear from president obama tonight? that's what i asked the c.e.o. of caesar's entertainment. gary loveman runs the largest gaming company in the world. caesar's entertainment is a $9 billion conglomerate with casinos and hotels. headquartered in las vegas, nevada, it operates in a state with one of the highest home foreclosure and unemployment rates in the country. i began by asking loveman what president obama needs to do to
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get jobs growing again. >> first i'd like to hear a significant intervention into the housing market which i believe is the portion of our economy must be addressed if economic growth is to quicken, and second, a very simple set of prescriptions for how to address the budget deficit in a way that does not interfere with growth. those two things would set the table for economic revitalization and job creation. >> susie: our understanding is the president is not going to address housing in his speech. >> i think the failure to address housing is a terrible omission as much associated with job creation. if we don't stimulate the housing market properly, there's very little likelihood we will see meaningful job growth and what's necessary at this point is we allow homeowners who are underwater in their existing message obligation, reduce their payments accordingly, keep their good credit in place so they can go out and continue to buy things, use their credit cards and spend that extra money to stimulate the economy news and what about tax breaks,
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mr. loveman? it's been suggested if you give companies a tax credit for new employees, they'll hire more. would you be motivated to hire under those circumstances? >> we would not. i think that's an ineffective part of the president's proposal. i do not believe companies like mine are withholding employment because they see the need for a very modest change in the marginal cost of employees glued. >> announcer: would that help small businesses? >> it could help small businesses but i really don't think that's the principal issue. what we need to stimulate employment is greater demand. that has to come from basic source of economic growth, not through the subs dizzation of employment. >> what would have to happen for you at caesar's to do more hiring? >> for us to do more hiring we need more visitors and the visitors spending more money and the reason they will do that is because they feel more secure in their own finances and spend more time and more money on leisure and coso in a more grand fashion. >> so how is your business doing in terms of revenues, in terms of visitors coming to your casinos? >> well, we have no shortage of
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visitors. ironically, we've had about the same number of business from the evenly crise forward but we've seen those visitors spend quite a lot less. the biggest source of improvement for a business like ours is to see those visitors spend more when they're with us, gaming more, better food and beverage experiences, more visits to the showroom, these sorts of things. >> i was surprised to see caesar's is building this huge casino and retail complex on the las vegas strip. i know you're in the gambling business but it seems chancy give than consumers have gotten so stingy about spending. >> what we're building is not a casino. it's a series of attractions, retail and dininguc entertainment experiences that cause people that may be in the city to come into our neighborhood. and i think this is the kind of revitalization that las vegas really needs. >> so what's your take on consumer mood? you deal with so many consumers. >> i think consumers are very troubled, and we see this, as we dfor example, in august with the gyration in addition the stock market, almost immediately causing people to spend less money when they were with us so
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i think our customers see a tremendous amount of uncertainty in their futures and they're being very conservative. >> there's a lot of talk about recession, as you know. are you seeing that in your business? >> we have not seen it yet. we have not seen, for example, a reduction of people making reservations at our hotels and have not seen any falloff of people's attendance at our entertainment events, but nor have we seen bouyant increases so i think we're treading water. >> are you preparing for a downturn? >> we are. >> in what way? >> by being very conservative about things like hiring and capital expenditures and not committing ourselves under any assumption of a more bouyant future. >> so many people are looking to the white house and the federal reserve to fix the u.s. economy. but is there anything that american businesses should be doing to turn the u.s. economy around? >> the principal obligation of american businesses is to be innovative and find creating ways to apply capital to grow their businesses. traditional means of froth are largely limited and the data has shown that very clearly.
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we already have most of what any of that would volve. you need to find something innovative, like the project we are doing in las vegas as an example, to generate the need to go out and invest. so that cycle is what has to be generated in order for companies to part with this money and do things that are innovative, rather than just building bigger and bigger assets that are already under-utilizeed. >> all right, there loveman, thank you so much for your time. good talking with you. >> thank you. >> tom: stocks declined today as ben bernanke's remarks failed to calm investors. the dow dropped 119 points, the nasdaq fell nearly 20 and the s&p 500 off almost 13 points. trading volume lower on the big board at 945 million shares, but higher on the nasdaq at just over two billion shares. as president obama makes his speech on job creation, the number of people seeking unemployment benefits is on the rise. the labor department says new applications rose by 2,000 to a seasonally adjusted 414,000. fixed mortgage rates fell this
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week to the lowest levels in decades. the average rate for the 30-year fixed mortgage fell to 4.12% according to freddie mac, the lowest rate on records dating back 40 years. the average rate on a 15-year fixed mortgage, a popular refinancing option, fell to 3.33%. economists say that's likely the lowest-ever rate. >> susie: those economic reports stack up with others confirming the severe slowdown of the u.s. economy. recession worries are also intensifying, even though an economic recession is still far from certain. erika miller has more on what it could look and feel like for many americans. >> reporter: there's growing concern the u.s. economy is in danger of slipping into recession. still, some economists, like drew mattus, think it's a long shot. >> if you think about what a normal probability of a recession at any given year is, it's about 15%. it might be slightly above that at this point, but it certainly
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is not as elevated as i think a lot of people are making it out to be. and, if there is a recession, it's not expected to be nearly as painful as the last one in 2008. banks are in much better shape now than they were back then. economist brian levitt also finds it hard to believe the weakest areas of the economy could get much worse. >> a lot of the components of the us economy are already at very depressed levels-- whether it's construction, whether it's auto sales, inventory-to-sales ratios in the manufacturing sector remain lean. there doesn't appear to be a lot of room to fall. >> reporter: if a recession does happen, many economists think it would resemble the short and shallow ones of 2001 and 1991. the 2001 recession was caused by the bursting of the dot-com bubble and made worse by the 9- 11 attacks. but just two months after the attacks, the economy was growing again. the recession of 1991 was caused by the savings and loan crisis, and also lasted about eight months. but, there are some important
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differences now compared to those periods. >> the united states economy was able to recover quickly out of those. now, a lot of that was monetary policy-- lowering rates, readying credit to build again. we don't have that flexibility today. >> reporter: best case scenario? most economists hope the economy muddles along with slightly less than 2% growth in the second half of the year. next year doesn't look much better. and it could take years before there's a serious dent in unemployment. so, whether or not the u.s. technically enters recession in the coming months, it may feel like one for many americans. erika miller, "nightly business report," new york.
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>> tom: stocks were broadly lower as federal reserve chief ben bernanke did not give investors any new reason to be hopeful a change in policy was coming very soon. here's today's chart of the s&p 500. after poking ever so little into positive territory as bernanke's mid-day speech wore on, buyers lost enthusiasm and the index closed down 1%. banking stocks were the biggest drag. this k.b.w. bank exchange traded
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fund concentrates in big banks. its share price fell 2.5%. volume was light today. this sector fund remains down by more than 20% from its summer time on this 90-session chart. j.p. morgan led the dow industrial losers with its 3.8% fall. volume was about average for j.p.m. with today's drop, the stock is about a dime above its low in august, which was its 52-week low. leading the dow gainers, a name we haven't seen at the top of the index-- cisco systems. shares popped more than 2.5%, pushing up to the top of the trend the stock has been in since june. it has been a rough year for shareholders, with the stock stair-stepping lower as the company issued a series of disappointing outlooks. today, cisco was on the receiving end of some positive analyst comments. yahoo continues to see follow- through buying after this week's surprise firing of c.e.o. carol bartz. it added another 6% this time.
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the company has increased its market value by almost $2 billion since letting bartz go. this is the past 90 sessions. here's the past year for yahoo. it is back to where it was trading last september. 12 months worth of trading. activist investor daniel loeb announced a 5% stake in the company. he's calling for a reorganization of the board of directors. we will want to watch semiconductor stocks tomorrow. after the close tonight, semiconductor maker texas instruments cut its third quarter outlook, blaming what the company called "broadly lower demand across a wide range of products." disappointing forecast here. let's take a look at the semiconductor sector exchange- traded fund. texas instruments makes up 20% of this fund. intel the other big chunk. chip makers have had a tough go since may as firms have reported disappointing computer sales
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thanks to the growing tablet market. clearly a sector to watch. finally, a deal. medical equipment services firm perkin elmer is spending $600 million in caliper life sciences. perkins stock fell 6% on the offer, which is $10.50 per share for caliper. caliper closed just below that take-out price. and that's tonight's "market focus." >> susie: it's a new school year, and you may be brainstorming what you can do to make it your child's best year yet. tonight's "kids and cash" has some ideas for new school year resolutions. here's alisa weinstein, author of "earn it, learn it." >> just a few short weeks ago, my daughter and i were standing in the back-to-school aisle, and i found myself making this mental check-list. this year, she's absolutely doing her homework as soon as she gets home from school. this year, she'll watch less tv. this year, i will make her more exciting lunches. and i realized parents don't make new years resolutions in
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january. we make them in september. that's our new year. which makes it a perfect time to say, "this year, i will broaden my child's fiscal understanding." now while a bit tougher than simply swapping baby carrots for edamame, squeezing money lessons into our back-to-school-busy lives doesn't have to be this overwhelming project. keep it simple and natural. try, "this year, i'll show my kid what the cell phone bill looks like." or, "this year, my child will help plan and budget our family vacation." you can even go all out and instate a more formal allowance or salary program. now, true, many of us break our new years resolutions, by, say, march. but look at it this way: in this case, if you make it to march, your kids already seven months in. i'm alisa weinstein. >> susie: join us tomorrow for a special edition of "nightly business report," remembering september 11. we'll look at the development of the homeland security industry to the massive changes to the airline industry.
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we'll also profile one wall street firm that was nearly wiped out on 9/11, but has found a way to expand since then. >> susie: google is buying zagat. it's gobbling up this popular restaurant guide so its users can connect with local businesses. terms of the deal, including price, were not disclosed. founders tim and nina zagat plan to remain part of the company. that was bad news for "open table," an online service which provides restaurant reviews and lets users make restaurant reservations. shares fell $5 or more than 8% to close at $57.50 >> tom: f.b.i. agents searched the headquarters of solyndra today. that's the now-bankrupt solar power company that received $535 million in federal loans. solyndra shut its california factory a week ago and terminated about 11,000 workers. lawsuits have been filed alleging that it did so without proper warning or required compensation for the employees. the energy department made it
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the first to win approval of a federal loan guarantee. president obama personally visited the plant last year. due to our special september 11 program tomorrow night, we feature our weekly "market monitor" this evening. it's chuck carlson, c.e.o. of horizon investment services. he's with us from the c.m.e.
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group in chicago. chuck, welcome back. nice to see you again. >> thanks for having me, tom. >> tom: we saw you back in the springtime in march. you were not yet convinced stocks had entered a bull market back then. clearly, we've moved lower. what's your take now? >> the dow theory which is a tool my firm use divine the market, which looks at both the dow industrials and dow transports, says this is still a bear market. we had a bear market signal on august 2, a very clear signal, as a matter of fact, under the dow theory and the market subsequently fell about 1,000 points. it has recovered. i don't necessarily think we're in for a very deep bear market. that's me talking and not the dow theory. i think there are things out there that will kind of put a damp or a dramatic plunge from these levels, but still i think you'll see the trend, at least in the short term here, the pressure is probably going to be on the downside. >> tom: what are some of those things you see coming perhaps before the end of the year that could signal at least to you
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anecdotally a better market ahead? >> for starters, you know, again, the interest rate environment remains very conducive for equities. yes, people are now putting money into bonds, commodities, expect, but when you look at you can get visually nothing in a money market that's fairly bullish for stocks. i think the interest rate environment is a plus. i don't think you're going to see corporate profits fall off the face of the earth. they may slow a little bit, but i don't think they're going to fall to a point where we get into a kind of 2008-2009 scenario where you just see the market plummet as corporate profits plummet. >> tom: you have been raising cash looking for areas to put it to work. one of your new spiks exxonmobil. now if you're a bit concerned about the market in the short term, why attach money to such a cyclically sensitive name? >> well, for starters, the stock is cheap. you can get exxon now at nine times 2011 earnings estimates. it's already come off its
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52-week high, around 15% to 20% so you are buying it at a better price. furthermore, you're getting a 2.6% yield, well above what you get on a 10-year treasure. when you put that package together of value, cash flow, and at a pretty good price right now relative to where it was two months ago i think it's a good buy, plus i think the megacap stocks, tom, are going to be the place to be as the market comes out of the bottom here. >> tom: folks looking for safety in the multinationals with the dividend yield as well. microsoft plays into that theory, your other new pick, msft. of course the focus on on microsoft is what is going to spur its share prize priceto a higher price or is it a bank account right now where you collect that dividend? >> well, i think it's a story where you can collect the dividend. it's a cheap stock, and there's something that can happen from a catalyst standpoint. i think a lot of their businesses are actually growing reasonably well, and you're seeing that in their profit
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growth. but beyond, that i think there are things microsoft could do. they could issue a dramatically larger dividend if they chose to. they can spin off businesses if they chose to. so there is value there. yes, everybody has kind of poh-pohed microsoft and the p.c.-related companies because of the emergence of apple and some of these other technologyes, but i think all that's done is just created a tremendous value in microsoft. now, i'm not looking for that stock to triple here, but i think in this environment wthat yield, with that safety i think it's a decent place to be right now. >> tom: chuck, real quick give us an update on the picks from august. ibm, the only one to gain, and hess down 27. do you still like the three. >> we like ibm, and have since sold hess. >> tom: and you only own the other two you mentioned earlier? >> yes, that is correct.
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>> tom: our market monitor has been chuck carlson. >> susie: that's "nightly business report" for thursday, september 8. i'm susie gharib. good night everyone and goodnight to you too, tom. >> tom: good night susie. i'm tom hudson. good night everyone, we hope to see all of you again tomorrow night. "nightly business report" is made possible by: this program was made possible by contributions to your pbs station from viewers like you. captioning sponsored by wpbt captioned by media access group at wgbh access.wgbh.org
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